FCC Investigates Netflix's Deals With Comcast, Verizon

A dispute between Netflix and Internet service providers about choppy video streams has drawn the attention of the Federal Communications Commission, which said today it will investigate the problem.

“Consumers pay their ISP and they pay content providers like Hulu, Netflix or Amazon. Then when they don’t get good service they wonder what is going on,” FCC Chairman Tom Wheeler
said today in a statement. “I have experienced these problems myself and know how exasperating it can be.”

Wheeler adds that the FCC is “looking under the hood,” at the
new interconnection agreements between Netflix and ISPs, including Comcast and Verizon.

Those deals -- which involve Netflix paying a fee to connect directly to the ISPs' servers
-- mark an attempt by Netflix to improve the quality of its video streams. But the company says it shouldn't have to pay extra “interconnection” tolls.

Even with the
interconnection agreements, Netflix and Verizon are still publicly battling over choppy video streams. Last week, the online video company told Verizon users who were waiting for their videos to buffer that the network was “crowded.” Verizon countered that
the message was a “PR stunt,” and demanded that Netflix stop making “false accusations.”

Verizon said that if anyone was to blame for poor streams it was Netflix,
which sends some of its streams via middlemen that have “congestion issues” with some IP networks.

Netflix responded by reiterating its view that Verizon is at fault.
“To try to shift blame to us for performance issues arising from interconnection congestion is like blaming drivers on a bridge for traffic jams when you're the one who decided to leave three
lanes closed during rush hour,” Netflix wrote to Verizon on Monday.

For now, it's impossible to know who's right because details of the deals between Netflix, ISPs and intermediaries
(like Cogent and Level 3), have never been made public.

Wheeler himself seems to acknowledge that the first step toward resolving the problem involves gathering more data. “Consumers
want transparency. They want answers. And so do I,” he stated. “The bottom line is that consumers need to understand what is occurring when the Internet service they’ve paid for does
not adequately deliver the content they desire, especially content they’ve also paid for.”

Advocacy group Free Press praised the FCC's move, but says that the agency also should
share the information it gathers with the public. “If the FCC is serious about using transparency to empower consumers, it can't keep the information it unearths to itself,” policy
director Matt Wood said in a statement.

The group also points out that examining contracts is only a first step. “If the agency is serious about protecting the public, it also needs to
stop discriminatory abuses once they’re disclosed,” Wood stated.

He adds that the only way to do so involves reclassifying broadband as a “telecommunications” service.
Free Press and other advocacy groups have been pushing the FCC to do so for years, but without much success so far.